During the third trading day of the week, Bitcoin gained $2,600. On the one hand, such growth can hardly be called trend-forming. Simply put, the quotes only moved (and not far from) their minimums. On the other hand, this growth could be provided by a favorable fundamental background, which has not existed for a long time. Yesterday, it became known that a large management company Victory Capital ($157 billion under management) wants to enter the cryptocurrency market. It announced the creation of a special fund, which will be engaged in investing in digital assets. It is not yet known about the timing of the start of the project, however, the markets reacted positively to this information, as they were simply tired of the daily disappointing news from China, the United States, or personally from Elon Musk and Donald Trump. At the same time, Shiller, who won the 2013 Nobel Prize in Economics, believes that the term "bubble" that modern economists use to refer to any market that expands too much is not suitable for defining what is happening with Bitcoin. According to Shiller, the "bubble" always inevitably bursts and nothing remains after it. In the case of bitcoin, it is better to use the word "trend". This word best reflects the meaning of Shiller's idea of the word "fashion". In other words, when in 2020 surplus money began to flow to the markets due to various programs to stimulate the economy and budget assistance, bitcoin became "fashionable" for a certain time. Investors needed to invest cash somewhere, which led to strong growth in the cryptocurrency and stock market. However, if the "bubble" bursts and the asset collapses to zero, then in the case of a "trend" the asset becomes more expensive and cheaper at different periods of time, which depends only on the mood of investors, traders, and their capabilities. Basically, this is exactly what has been happening with Bitcoin in the last 10-12 years. We have seen strong bullish trends more than once, which ended in a fall of 80-90%. However, Bitcoin did not disappear or die. It was underground for several years exactly until the next "trend". Most likely, it will be so this time. Despite the fact that bitcoin rose in price yesterday, this is just one day. For Bitcoin, $5-6 thousand of movement is not much. The news from Victory Capital is, of course, upbeat, but recall that there are many other important topics for the cryptocurrency community at this time. If, for example, tomorrow it becomes known that China prohibits mining completely or some other negative news arrives, then Bitcoin can just as easily and simply return back to the levels of $32,000 - $33,000.
Technically, bitcoin stopped falling for a while and recovered to the level of $37,000 per coin. However, the illustration clearly shows that each subsequent local peak in value is lower than the previous one. Simply put, bulls cannot even update the previous local high. This suggests that today or tomorrow, we will face a new drop back to the area of $32,000 - $33,000 or even lower, which is to the support level of $30,500.
The material has been provided by InstaForex Company - www.instaforex.com